Elon Musk's SpaceX said on Monday it will buy wireless spectrum licences from EchoStar for its Starlink satellite network for about $17bn (R297.35bn), a major deal crucial to expanding Starlink's nascent 5G connectivity business.
The companies also agreed to a deal that will enable EchoStar's Boost Mobile subscribers to access Starlink's direct-to-cell service to extend satellite service to areas without service.
The spectrum purchase allows SpaceX to start building and deploying upgraded laser-connected satellites the company said will expand the cell network's capacity by “more than 100 times”.
Gwynne Shotwell, president and COO of SpaceX, said the deal will help the company “end mobile dead zones around the world. With exclusive spectrum, SpaceX will develop next-generation Starlink direct-to-cell satellites, which will have a step change in performance and enable us to enhance coverage for customers wherever they are in the world”.
The news sent shares of EchoStar surging 19% in early trading. Shares of US wireless carriers AT&T and T-Mobile were down more than 3% and Verizon was down more than 2%.
The push comes amid fast-rising wireless usage. In 2024, Americans used a record 132-trillion megabytes of mobile data, up 35% over the previous record, industry group CTIA said on Monday.
SpaceX has launched more than 8,000 Starlink satellites since 2020, building a distributed network in low-Earth orbit which has seen demand from militaries, transportation firms and consumers in rural areas.
About 600 of those satellites — which SpaceX calls “cell towers in space” — have been launched since January 2024 for the company's direct-to-cell network, orbiting closer to Earth than the rest of the constellation.
Crucial to those larger satellites' deployment is Starship, SpaceX's giant next-generation rocket that has been under development for about a decade. Increasingly complex test launches have drawn the rocket closer to its first operational Starlink missions, expected early next year.
The deal comes months after the Federal Communications Commission (FCC) questioned EchoStar's use of mobile-satellite service spectrum and raised concern about whether it was meeting its obligations to deploy 5G in the country.
EchoStar said it expects the transaction with SpaceX and the AT&T deal will resolve the FCC's inquiries.
An FCC spokesperson said the “deals that EchoStar reached with AT&T and Starlink hold the potential to supercharge competition, extend innovative new services to millions of Americans and boost US leadership in next-generation connectivity”.
In August the company sold some nationwide wireless spectrum licences to AT&T for $23bn (R402.29bn). AT&T agreed to acquire 50MHz of nationwide mid-band and low-band spectrum. President Donald Trump previously prodded EchoStar and FCC chair Brendan Carr to reach an amicable deal for the company's wireless spectrum licences.
SpaceX will pay up to $8.5bn (R148.67bn) in cash and issue up to $8.5bn in stock. SpaceX has also agreed to cover about $2bn (R34.98bn) in interest payments on EchoStar's debt obligations until late 2027.
After the sale, EchoStar will continue operating its satellite TV service Dish TV, streaming TV platform Sling, internet service Hughes and its Boost Mobile brand.
SpaceX had aggressively pressed the FCC to reallocate underused airwaves for satellite-to-phone service after alleging EchoStar failed to meet certain obligations.
In a letter to the FCC in April, SpaceX said EchoStar's spectrum in the 2GHz band “remains ripe for sharing among next-generation satellite systems” and the company has left “valuable mid-band spectrum chronically underused”.
The deal with EchoStar will allow SpaceX to operate Starlink direct-to-cell services on frequencies it owns rather than relying on those leased from mobile carriers such as T-Mobile. In May the FCC approved Verizon's $20bn (R349.82bn) deal to acquire fibreoptic internet provider Frontier Communications. Verizon spent $52bn (R909.53bn) to acquire and clear key spectrum in 2021.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.